Take-Two Interactive Software delayed Red Dead Redemption 2 this week until 2018. But that didn’t derail the company’s outlook for the current fiscal year. That’s because the video game publisher isn’t as dependent on its huge launches as it once was. Now it can count on revenues from its back catalog, online game transactions, live updates and tournaments, and downloadable content releases. All of those things help smooth the financial results.
Although Take-Two’s stock price dipped after the Red Dead Redemption 2 announcement yesterday, it’s now back up more than 5 percent today after the company reported earnings exceeded expectations. Recurrent consumer spending — which includes all sales from DLCs, microtransactions, and in-game currency after someone first buys a game — was also reported to have grown 64 percent year-over-year to a record high, according to Strauss Zelnick, CEO of Take-Two, in an analyst call today.
The publisher’s focus on online sales— such as updates or downloadable content — will offset the lack of new game launches. Take-Two is also generating a lot of back catalog sales and in-game transactions, generating $880.7 million and about $525 million respectively, thanks to the popularity of both Grand Theft Auto V and GTA Online.
Since its release in 2013 as an online multiplayer addition to GTA V, GTA Online’s sales have continued to increase every year. This is in part due to the success of its plentiful updates. Throughout fiscal year 2017, GTA Online released 12 updates and contributed the most to recurrent consumer spending. Take-Two also saw a 71 percent increase in the amount of in-game spending for NBA 2K17, which is now approaching 8 million copies sold.
This model of live operations that focuses on downloadable content and microtransactions has proven successful for other companies as well. Electronic Arts credits its record fiscal year to their focus on live services for games such as FIFA 17, which reached 21 million players this year. Activision Blizzard has also seen enormous revenue from in-game purchases, reporting $3.6 billion in 2016.
In the past, Take-Two made money in years when it launched a Grand Theft Auto game, and it lost money in the off years. Today, Take-Two is more diversified, with a wider variety of franchises, and the money from live operations helps it stay profitable even during the times in between big launches.
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